Simple savings account is best for small contributions

DEAR BRUCE: I am in my late 60s and I want to purchase a long-term annuity for my grandsons. I currently put $50 per month each in a savings account for them, and I give them 1 percent of my gross income from my part-time hot dog cart business.

I remember 30 years ago, whole life insurance policies with a guaranteed return after 30 or so years were quite large. I am unable to find anything along these lines today. When I try to discuss putting away this small amount of money, no one wants to be bothered. -- P.C.

DEAR P.C.: Unfortunately, the small amount of money that you’re putting aside, $50 a month or $600 a year, plus the 1 percent of your hot dog income, is not going to be enough to attract anybody’s attention. Why you would want to buy a long-term annuity is another question.

For the time being, until the money increases substantially, I would simply continue to put all of the money in savings. Just put their names on the account, which will make them the beneficiaries upon your demise.

DEAR BRUCE: As a single, 56-year-old with a yearly salary of approximately $28,000, I would value your opinion on how I am set for retirement at 70. I have $260,000 in a 401(k), $10,000 in 12 CDs, $20,000 in an IRA and $30,000 in an emergency fund account. My mortgage and car are fully paid. I live a very frugal life.

A friend and I were having a discussion and my friend feels I should have about $1 million in total by the time I retire to live comfortably. I feel if I keep living the frugal life and continue to add $6,500 to my IRA each year, I should be fine in my golden years. -- J.S.

DEAR J.S.: Seems to me that you’ve got things in control. You’re living frugally, which is the key to having a substantial retirement fund, given the relatively modest amount of income you’re earning. Living on $28,000 is not easy, but the math says you’ve done it! And you’ve invested the money reasonably well.